Reality Check: Bharti Airtel — tackling debt

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The stock of Bharti Airtel rallied about 3 per cent last week. The trigger was the sale of 10.3 per cent stake in its tower business, Bharti Infratel, to private equity firm KKR and Canada Pension Plan Investment Board for ₹6,194 crore. The move should help the company reduce its debt of ₹97,395 crore (as of December 2016).

Debt has increased over the years due to acquisition of spectrum and other telecom companies to meet rising competition.

While on the one hand, there is sale of assets by telecom players to pare debt, on the other, the industry is dogged with consolidation due to intense competition following the entry of Reliance Jio. Bharti Airtel in recent months has acquired Telenor and Tikona to improve its network penetration.

These acquisitions could increase its debt despite the sale of its tower business. The debt-to-equity ratio was about 1.5 times as of December 2016.

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